USPS Board of Governors Approves 2008 Financial Plan - Projects Loss of $600 Million
The Postal Service Board of Governors has approved a 2008 financial plan for the for the USPS that includes $1 billion in cost savings and puts its expense growth lower than inflation.
The projections do not assume any price changes for postal products and services over the next fiscal year, which begins Oct. 1. The Board of Governors has not made a decision on future prices but applauded the Postal Regulatory Commission for being well ahead of schedule with its recommendations on the new rate regulations.
The IFP projects revenue of $78.2 billion and expenses of $78.8 billion in fiscal 2008, for a net loss of $600 million. The financial plan is significantly affected by the Postal Accountability and Enhancement Act (the Postal Act of 2006), as are finances in the current fiscal year.
2007 One-time Costs
For fiscal 2007, the Postal Service projects revenues of $75.0 billion and expenses of $80.4 billion for a projected net loss of $5.4 billion. The net loss of $5.4 billion includes operating income of $1.5 billion and a $6.9 billion negative financial impact from the Postal Act of 2006 which includes a $3.0 billion one-time escrow expense, which was required under the previous law, an additional $5.4 billion payment into the Retiree Health Benefit Fund for 2007, and $1.5 billion in savings from CSRS relief.
"Absent the negative financial impacts from the Postal Act of 2006, the Postal Service projects operating income of $1.5 billion this year and $400 million next year," said H. Glen Walker, Chief Financial Officer.
2008 Expense Growth Below Inflation
Total expenses for fiscal 2008 are planned at $78.8 billion, or 2.0 percent below projected fiscal 2007 expenses. Even after excluding the $3.0 billion in one-time escrow expenses from 2007, expense growth in fiscal 2008 is projected at 1.8 percent, below the assumed growth in the CPI.
The 2008 plan predicts a record ninth consecutive year of Total Factor Productivity growth, which measures the relationship between workload and resource usage. TFP is planned to grow by 1.0 percent in 2008.